Yesterday we gave you the good news, today you are getting the bad news. Unfortunately the good news wasn’t very good. It was that auto insurance rates are increasing at 2x the rate of inflation. Now for the bad news: in 2013 home insurance rates went up 3.4x the rate of inflation.
Higher Insurance Rates Added to list of Certainties in Life
The Consumer Price Index (CPI) shows inflation at 1.5% in 2013. Perr & Knight’s RateWatch report released last week shows home insurance prices up 5.1% in the same time period.
In our role as consumer advocates, here at Injured Money we began digging into these numbers to find the justification. In summary, there is no justification for higher auto insurance rates. This will be the topic of a future blog post on what’s fundamentally wrong in the insurance industry.
At least in the home insurance market there is some justification for rate increases based on costs. A report for the National Association of Home Builders (NAHB) shows a modest increase in home construction costs. However, the increased home construction costs in 2013 were dominated by increased costs of framing materials, a cost which has a greater impact on new construction than reconstruction.
Two states defied the higher insurance rates trend
Two states, California and Hawaii, experienced overall decreases in homeowner insurance rates in 2013 of -3.4% and -0.7%, respectively. California also leads the nation in consumer protection laws for people who own insurance. These laws give people living in California a better chance of recovering damages than in other states. All states should follow the lead of California in both their laws protecting owners of insurance and their insurance rate approvals.
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